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AG Mortgage Bank grows full year 2023 profit by 92%

GCR assigns BB+ long term rating to AG Mortgage Bank

AG Mortgage Bank Plc grew its full year 2023 profit after tax (PAT) by 92 percent to N428.863million from N223.542million it recorded in year 2022.

The company’s annual report and financial statements seen by BusinessDay shows that for the year ended December 31, 2023 its gross earnings also rose by about 60 percent, to N3.243billion from year 2022 low of N2.027billion.

In the review 2023 financial year, its pre-tax profit stood higher at N702.868million from N379.024million in 2022 financial year, representing 85 percent year-on-year (YoY) increase.

Total assets increased by 22percent from N18.2 billion in 2022 to N22.1 billion in 2023. Shareholders’ funds also grew by 8percent from N5.21 billion in 2022 to N5.64 billion in 2023 in response to the growth in profit and improvement in regulatory reserves.

The principal activities of AG Mortgage Bank Plc are the provision of mortgage banking to individual and corporate customers, and it is also duly accredited by the Federal Mortgage Bank of Nigeria to access National Housing Fund (NHF) scheme. AG Mortgage Bank Plc has a branch at the Head Office, two branches at Festac Town, a branch in Enugu and Abuja, and two cash centres at Surulere and Apapa.

AG Mortgage Bank Plc has 10 billion issued ordinary shares of 50kobo each. The securities are currently traded on the NASD OTC Securities Exchange which provides a secondary market for the listing and trading of the shares of unquoted public securities.

While commenting on the result, Ngozi Anyogu, Managing Director/Chief Executive Officer, AG Mortgage Bank Plc said, “As the economy continues to open up, and the demand for housing in Nigeria continues to rise, the bank is positioned to take advantage of the growing demands to extend its reach to prospective homeowners, particularly first-time buyers.

“The Bank is at the concluding stages of securing medium to long-term funding through the capital markets, this is expected to close our funding mismatch, lower the relatively high cost of funds burden, and improve on our stock of mortgage assets. The prospect of full digitalization of our operational processes by the end of 2024 FY will ensure seamless services and operations for our customers and improve our operational efficiencies across products and service offerings. As we continue to work towards deepening our relationship with our anchor partners and investors in 2024, we shall leverage digital technology and the windows it offers to improve our bottom line,” Anyogu.

For the 2023 financial year results, he said: “Gross earnings stood at N3.24 billion, representing a 60percent growth over 2022 FY numbers and this is mainly due to the growth in interest income from the mortgage sources. Net interest expenses have also been on the rise though at a slower pace compared to the growth in interest income. The growth in interest income and expenses can be attributed to the upward revision of the benchmark rate. As a result, operating profit before taxes increased by 85percent from N379 million in 2022 to N702.8 million in 2023”.

The CEO noted that the “growing housing deficit in Nigeria currently put at 28million homes and requiring over N21 trillion to resolve is still on the front burner, while the present administration at the federal level is making concerted efforts to narrow the gap, this no doubt presents an incredible opportunity to the mortgage banking and real estate subsectors. The year 2023 was quite a challenging one as several issues impacted the marketplace.

“The first half of the year was characterized by a mix of electoral tensions, policy decisions by the government, and their impact on the private sector and other productive sectors. The inflationary trend continued upward as it throttled to 32.84 percent in November 2023 from 23.75 percent in December 2022, thus eroding consumers’ confidence and making mortgage products and services very expensive. The foreign exchange challenges persisted, as the country faced sharp currency depreciation, illiquidity, volatility, and transparency which impacted negatively on the operations of the sub-sector. The FX rate which was N461.50/$1 at the official rate and N737/$1 at the black-market rate at the beginning of the year worsened to N888.35/$1 and N1,230/$1 respectively, as of December 18, 2023”.

He further said: “The recent policy settings and other macroeconomic issues seemed to have stifled business activities, investment, and growth amplifying macroeconomic risks by highlighting the issues and opportunities that abound in the real estate sector. According to the National Bureau of Statistics, the real estate sector contributed 6.6percent to Nigeria’s gross domestic product (GDP) by the end of Q4 2023 witnessing a marginal growth from 6.18percent in the previous year”.

Anyogu further noted that “The bank in 2023 recorded an improvement in its operations owing to technological advancement which has helped bring our products and services closer to our customers. The deployment of digital devices and mobile banking applications is partly responsible for our operational efficiencies.

“Also, the growth in our Risk Assets and efficient appropriate pricing ensured that the impact of rising costs on our deposit rates was appropriately hedged. The bank also ensured that our deposit placements with other banks during the year were top-notch. With the rising cost of operation propelled by the rising inflationary trend, the bank was also strategic in managing its cost structure during the year,” he added.

As at December 31, 2023 shareholders that held 5percent or more of the issued shares include: Assemblies of God Ministers Benefit Scheme which hold 5.192 billion units, representing 51.9 percent of the issued shares; Charterhouse Asset Management Plc (2.245billion units which represents 22.5 percent equity holding); AG Nigeria (1.502billion units which represents 15 percent equity holding); while and Others account for 1.059billion units of the bank’s issued shares, representing 11 percent of AG Mortgage Bank Plc equity holding.

AG Mortgage Bank Plc was incorporated on July 21, 2004, to carry on business as a Primary Mortgage Institution (PMI). It was granted a mortgage banking licence by the Central Bank of Nigeria (CBN) in December 2004 and commenced full operations by January 31, 2005.

The company has since its inception developed innovative products that have received the approval of the Central Bank of Nigeria. In addition, the company has been approved by the Central Bank of Nigeria and accredited by the Federal Mortgage Bank as a window through which customers can access the National Housing Fund.